Slides from the presentations by the following speakers at the Media & Telecoms: 2013 & Beyond conference on 15 January 2013:
•Sir Martin Sorrell, CEO, WPP
•Michael Tobin, CEO, Telecity Group
•Liv Garfield, CEO, Openreach
•Dido Harding, CEO, TalkTalk Group
•Victor Zhang, CEO, Huawei UK & Ireland
•Cindy Rose, Executive Director of Digital Entertainment, Virgin Media
Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 15 January 2013. The event featured talks by 14 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts of the talks given by nine of those speakers: Sir Martin Sorrell, CEO, WPP Tim Davie, Acting Director General, BBC Dan Cobley, Managing Director, Google UK & Ireland Michael Tobin, CEO, Telecity Group Liv Garfield, CEO, Openreach Dido Harding, CEO, TalkTalk Group Victor Zhang, CEO, Huawei UK & Ireland Cindy Rose, Executive Director of Digital Entertainment, Virgin Media Q&A: Dido Harding, Victor Zhang and Cindy Rose Ed Richards, CEO, Ofcom
After a host of TV-related announcements/launches last quarter, the main feature of the last three months has been price increase announcements, with all four of the large operators announcing a significant price increase(s) to take effect between December 2012 and February 2013
High speed net adds remained strong at BT, and grew dramatically at the other DSL operators, although the latter figure remained very low in absolute terms. In time we expect strong adoption by Sky and TTG subscribers, but it may take years rather than months for consumer expectations of what is a ‘standard’ broadband speed to change
TTG reported some encouraging but not market-changing early figures for its new TV product, and BT is expected to launch a product with extra linear channels within the next few months. We continue to believe that both companies’ products will struggle to win subscribers off Sky and Virgin Media, but that they may have appeal to a modestly sized group of consumers that are not currently pay TV customers
Q1 2013 was a solid quarter, notable for low seasonal churn, uplift in television gross additions and good growth in home communications, although the rate is slowing The low quarterly ARPU increase of £2 was the weak point in light of the September price increases in television, testifying to the toughness of the economic headwinds rather than to competition from OTT services like Netflix and Lovefilm With NOW TV in its teething stages, the main impact of connected TV on Sky will only start to emerge in the second half of next year; while the most immediate issue is the entry of BT into the sports content market and the concomitant risk of sports rights inflation
BT Group revenue growth disappointed at the reported level, dropping from -6% to -9%, but adjusting for a series of one-offs underlying growth only dropped from -3.2% to -3.6%, easily made up for by another quarter of strong cost reductions Broadband net adds were again a little weak, with weather-related repairs slowing new line installations, but BT’s share held up well, at least against its fellow DSL operators Fibre-based connections continued to grow and BT further accelerated its build-out plans, with this (and not TV) holding the key to stabilising ARPU and increasing wholesale revenue in the years ahead
Keen to reposition itself as a media conglomerate, Vivendi is considering merging SFR with private equity-owned Numericable and its B2B sister Completel, while reducing its stake in the new entity to below 50%.
Sizeable savings would come from migrating SFR’s fixed line subscribers in urban areas from Orange’s copper network to Numericable’s coax and FTTB, and from eliminating Completel’s LLU network and Numericable’s marketing spend.
In the short term, execution would be challenging and require sizeable capex. In the longer run, coax is a much cheaper alternative to investing in FTTH. The merger would put pressure on the other two altnets, Iliad and Bouygues, to consider consolidation scenarios.
In Q3 Virgin Media delivered the strongest cable subscriber net adds it has enjoyed in years, with household net adds of 40k and broadband net adds of 57k ARPU and revenue growth moderated from the previous quarter, but remained strong in absolute terms at 2% and 3% respectively Broadband growth will likely still look modest compared to BT and Sky, but Virgin Media’s base is looking increasingly solid against any future attacks
BT’s acquisition of Premiership Rugby rights underlines its intentions to create a solid premium sports channel with expected launch in summer 2013
BT’s entry into the sports arena is part of a wider TV platform/content strategy that embraces the launch of a much enlarged basic channel offer, integration with YouView and fibre roll-out
Although expected to post significant losses on its sports channels over the next three years, BT’s commitment appears long term
BT has announced consumer price rises of around 6% to take effect from 5 January 2013; Virgin Media had raised its prices in April 2012 by around 5%, and we expect the LLU operators to largely follow, at least for line rental
While this was largely expected, given a (self-imposed) price freeze that expires on this date, continued price rationality in the UK broadband and telephony market is reassuring
The timings of the price rises should allow both BT and TTG improve their revenue growth in Q1 2013 after a weak Q4 2012
In this report we show our analysis of the performance, key trends, competitive dynamics and factors impacting the UK broadband, telephony and pay-TV markets
The first part of the report focusses on market level performance and KPIs such as volume and revenue growth, net adds, pricing and ARPU, and market shares as well as our analysis of key developments in high speed broadband and pay-TV offerings
The second covers the individual results of the four largest ISPs (BT, Virgin Media, BSkyB and TalkTalk Group) in the context of the wider market developments